tax advantage difference between LLC and Inc. ?

Answer 1

At the Federal leval, an LLC is a disregarded entity. A single member LLC's income and expenses are reported directly on Schedule C of your individual Federal tax return. A multi-member LLC is treated as a partnership and must file a partnership return on Form 1065. The income flows to the partners' individual returns.

At the state level LLCs are usually treated as corporations and taxed as such. Many states have minimum franchise taxes that must be paid regardless of income or loss. And some states have gross receipts taxes in addition to the corporate income taxes levied.

The treatment of a corporation at the Federal level depends upon the type of corp. An S-Corp is a pass-through entity. The corp files a Form 1120-S informational return and income flows to the shareholders' individual tax returns. At the state level, it's the same as an LLC.

A C-Corp files its own return and pays its own taxes. There is no tax benefit to a C-Corp compared to a Sole Proprietorship or partnership. In fact, a corp will normally pay higher taxes since there are no personal exemptions or deductions; the first dollar of profit is subject to tax and the tax rates are generally higher.

For the vast majority of small businesses there is no advantage to forming either an LLC or a corp. The protection they offer is from personal liability for any claims against the business. If you are in a risky business, such as a medical practice, it may be worth the expense. Even so, an LLC or corp will not shield your personal assets from any personal liability claims such as a malpractice suit against a physician.

If your business is not a risky one, you'll normally be better off doing business as a Sole Proprietorship or a Partnership and buying a good commercial liability insurance policy. The cost will often be less and it may provide better protection than an LLC or corp would without any insurance.

Answer 2

Co is simply a Corporation or Company, where as Ltd. is a public-limitted corporation/company, meaning that the company has sold voting shares, and thus if it doesn't more than 50% of it's own voting shares, is open to a hostile takeover.